Apr 6, 2020 · 39m · 20vc
20VC: Raising A $1.35Bn Fund I, The Emerging Secondary Opportunity For Early Stage Managers and Founders & What It Takes To Win The Best Growth Deals Today with Ravi Viswanathan, Founder & Managing Partner @ NewView Capital
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In this episode of The 20 Minute VC, host Harry Stebbings interviews Ravi Viswanathan, founder and managing partner at NewView Capital, about spinning out of NEA to raise a $1.35 billion debut fund. Viswanathan shares insights on growth-stage venture competition, targeted operational value add, secondary market liquidity, and effective board governance.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 35.5% of the talking time here. How this is scored →
Harry as informed peer 4.7 Guest teaching 4.1 Guest disagreement 0.6 Harry pushing back 1.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 15:54 Ravi gentle reframe on early vs late stage price sensitivity
Ravi mildly rejects the direct application of Peter Fenton's early-stage 'never turn down a deal on valuation' rule, arguing that pricing absolutely matters in growth and late-stage investing.
Hardest push from Harry ▶ 12:48 Harry calls VC value-add claims hot airHarry directly confronts standard industry pitch lines by calling VC operational value add mostly hot air unless restricted to a narrow set of core capabilities.
Biggest teaching moment ▶ 33:11 Ravi's board advice on playing the long gameRavi re-educates Harry on board management by cautioning against the temptation to constantly intervene, explaining that effective board members act as targeted role players over a long company lifecycle.
Harry holds his own ▶ 25:39 Harry breakdown of LP fund lifecycle misalignmentHarry demonstrates keen institutional domain knowledge by explicitly detailing how 10-year fund lifecycles force artificial exit pressures on founders during fund deployment second halves.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Ravi's Career Path to Venture and Founding NewView | 2 | 3 | 0 | 0 | Harry welcomes Ravi and asks broad biographical questions regarding his transition from science to consulting and venture capital. Ravi gives a detailed historical overview of his career path and the origin story of NewView Capital spinning off from NEA. | |
| Raising a $1.35 Billion First-Time Debut Fund | 3 | 4 | 0 | 1 | Harry references his own fund's experience at Stride to ask about fundraising a massive $1.35B debut fund. Ravi outlines the complexities of managing LP expectations and portfolio company transfers during a spinout. | |
| The Evolving VC Landscape and Quantum of Capital Challenge | 5 | 4 | 0 | 2 | Harry introduces Bill Gurley's quote regarding the quantum of capital being venture's biggest challenge to prompt Ravi on ecosystem dynamics. Ravi agrees with Gurley's premise, noting how excess capital degrades asset class returns over time. | |
| Differentiating and Providing Real Operational Value | 6 | 4 | 1 | 4 | Harry offers a strong thesis that most VC 'value add' claims are 'hot air' unless restricted to one or two core functions. Ravi accepts the criticism in part, outlining how NewView focuses operational support specifically on growth-stage advisory. | |
| Operational Support Strategy and Avoiding Board Micromanagement | 7 | 5 | 2 | 5 | Harry pushes on how non-gigantic firms can justify operational teams without Andreessen Horowitz resources, and later brings up Peter Fenton's advice on valuation traps. Ravi distinguishes early-stage price taking from growth-stage valuation sensitivity. | |
| Iconic Companies Case Study & Desired Return Multiples | 4 | 5 | 0 | 1 | Harry asks for a concrete case study on price sensitivity and delves into growth-stage target return multiples. Ravi shares the story of investing in Workday in 2009 and details why fundamental companies warrant price flexibility. | |
| Impact of Private Equity Entering Venture Growth | 5 | 4 | 1 | 2 | Harry asks about private equity firms entering growth venture and how to guide lean founders to deploy growth capital. Ravi outlines how PE serves both as competition and an exit liquidity channel. | |
| Staying Private Longer vs. Going Public | 6 | 5 | 1 | 3 | Harry cites Samuel Shaw on secondary markets and highlights the structural tension between 10-year fund cycles and long-term founder growth. Ravi explains why secondary liquidity relieves LP and founder pressure without forcing premature sales. | |
| VC Fund Dynamics and Secondary Solutions for Liquidity | 5 | 4 | 0 | 1 | Harry inquires whether NewView purchases secondary positions from early seed funds needing liquidity. Ravi confirms they actively target seed funds that have strong unrealized TVPI but need actual cash distributions. | |
| Managing Founder Secondaries and Employee Liquidity | 4 | 4 | 1 | 1 | Harry asks about the rise of founder secondaries and secondary financing products. Ravi agrees that moderate founder liquidity is healthy as a pressure relief valve, provided it does not extinguish their drive. | |
| Fostering Strong Founder-Board Relationships | 6 | 5 | 1 | 3 | Harry asks about board composition mistakes, cites his partner Fred's view on board intimacy, and openly admits his own imposter syndrome about adding value between board meetings. Ravi advises Harry to focus on discrete high-value moments rather than constant intervention. | |
| Quickfire Round with Ravi Viswanathan | 3 | 2 | 0 | 0 | Harry conducts a standard quickfire round touching on books, favorite board colleagues, core mottos, and recent deals. Ravi answers smoothly in a collaborative tone. |
Statements from this episode (27)
NewView Capital's $1.35B debut fund yielded three major exits within two years
“Launched in 2018 with their 1.35 billion dollar debut fund, They've already set themselves as leaders in the world of growth funding, with three massive exits in less than two years, in the form of, check this out, Plaid sold to Visa for 5.3 billion dollars, A…”
Viswanathan: Tech companies stay private longer as VC funds grow bigger
“We found is a lot of dynamics going on, one of them being companies staying private longer, another that these funds are getting raised faster and bigger funds are being raised, so these Portfolios are getting pretty large.”
NewView Capital spun out from NEA in 2018 with 30 companies
“So that's what we did in 2018. We orchestrated a spin-out from NEA with thirty-odd companies, and that's how NuView was formed, which when we closed the fund in late 2018.”
Viswanathan: Massive influxes of capital degrade overall asset returns
“Any time you have an influx of capital into any asset class, just a sheer volume of capital coming in much more by a multiple, usually what you see is returns degrade.”
Viswanathan: Most venture capital firms' operational 'value add' is hot air
“Yeah, I think you're spot on in terms of most of what's out there is hot air.”
Viswanathan: Overactive, micromanaging boards cause startup failures
“I find that where companies start failing is when boards get overactive and start micromanaging or vice versa, and that's when you see deterioration, but it's really pretty simple, at least in our approach.”
Viswanathan: Portfolio companies degrade when VCs take over operations
“Whenever that happens, usually the companies degrade pretty quickly.”
Viswanathan: Venture investors are price-takers for top early-stage companies
“Largely in this business, we are price takers for the best companies. And I think that's generally been the case in the last 20 years of venture with maybe one or two extreme examples.”
Viswanathan: Late-stage venture investing requires much higher valuation discipline
“So price does matter in the later stage because you're not really thinking about, you know, when you're thinking about a hundred X, 500 X, thousand X, whatever it is, those extreme early stage wins. If you pay 50% off for Two, three X off doesn't really matter…”
Viswanathan: Investors should lean in on price for elite founders
“What I have learned in my career is don't be afraid to lean in more and more on price for the elite CEOs, elite founders, and elite companies.”
Viswanathan: Workday's 2009 pitch was his most straightforward in 20 years
“When we heard the pitch, it was probably one of the most straightforward pitches I've ever heard in 20 years of venture, meaning we just had to fund that company, and the reason for that is there's the numbers, but you really have to see what is this company d…”
Viswanathan: NewView Capital requires potential for 10x returns on every growth deal
“The standard that a lot of people throw around is kind of a, let's make sure that the company is in that three to five X range, but every company we invest in, there has to be a thread or something where, you know what, this actually can get outsized returns a…”
Viswanathan: Private equity acquisitions emerged as new exit route over 2010s
“A lot of these firms are coming in not only to invest as minority growth investors, but also to buy our companies, which is a very new vein of exits for a lot of these venture-backed startups. It's really emerged, I'd say, in the last decade”
Viswanathan: Massive capital influxes introduce bad habits into startup leadership
“When you have so much capital coming in, that's when bad habits can start creeping in into the minds of the boards and the management”
Viswanathan: Don't flood market with capital when competitive intensity is murky
“If you're going up to a big market and you are a leader, then you actually want to lean in more with capital. Whereas if you get a lot more capital, but it's still very murky in terms of the competitive intensity, what you don't want to do is just flood the ma…”
Viswanathan: SaaS companies now need $200M ARR to go public
“So before, 1015 years ago, SaaS companies with a hundred million, you can go public. Now, it's actually more like 200.”
Viswanathan: MuleSoft intentionally delayed its IPO to optimize metrics
“We could have gone public earlier, but chose to really stay private longer, but really for the right reason.”
Viswanathan: Venture capital fails if private companies do not provide liquidity
“The other way to think about it is, at the end of the day, you can stay private longer, but you really do need to figure out a way to give liquidity to your investors, your venture and other investors, and even your employees. Because if you don't do that, ven…”
Viswanathan: Investors should let tired founders drive company exit decisions
“A lot of it really is in close consultation with the founding team, because you may want to hold, but if the founding team and the management team really are closest to the field, obviously, if they see a market transition or if they are getting tired and they…”
Viswanathan: Replacing early VC investors via secondary sales is healthy
“And I think it's very, very healthy to effectively switch out some of these earlier investors, give them a return, a really high quality return, and then in their shoes, other investors can step in.”
Viswanathan: NewView buys secondary positions from early seed funds needing liquidity
“We do, because if you think about seed funds, a lot of them, they have amazing returns, but a lot of that is more TVPI, total value, and they may not have gotten a lot of liquidity, because they're in these great companies, and they continue to accrete in valu…”
Viswanathan: NewView and NEA support controlled secondary liquidity for founders
“On the one hand, if they want to sell a small percentage of their stock to get some liquidity, and it's more of a pressure release mechanism for them personally, we actually encourage it. And we've done that in the past, both at Newview as well as at NEA.”
Viswanathan: Delaying independent board members is a major startup mistake
“I think that a huge mistake is not bringing in operators and independents soon enough. What happens is you have the normal progression where there are more and more rounds getting raised, and yet another VC Nothing against us, but yet another VC joins the boar…”
Viswanathan: Founders should curate board members as carefully as investors
“So I tell CEOs, curate your investors, but curate your board.”
Viswanathan: Board members should pick specific spots to add value
“And then you realize, you know what, your job is really not to do that. Your job is to pick your spots where you can actually be accretive to the company and the CEO. And I'd really focus in on that.”
Viswanathan: Tom Bogan is the best board member he has worked with
“I would say Tom Bogan. Tom is a senior exec at Workday now. He was CEO of Adapted Insights. I was on a board with him. I was on the Acquia board with him, and I would say just the best board member I've ever worked with just had incredible credibility. He was …”
Viswanathan: NewView Capital invested in Plaid following NEA's early-stage backing
“Yeah, this is an easy one. It's Plaid, which I was part of the team that led the seed and Series A at NEA many, many years ago, so I know Zach has been on your show, and I think the world of him, so one of my top priority after founding NewView is figuring out…”